Takeaway & delivery, the consumer, staycations, PPHE, 888 & other:

A DAY IN THE LIFE:

We used to keep chickens. They were wiped out several times by foxes and, on the last occasion, a restocking was vetoed because of a) the bloodshed but also b) the associated problem that we were feeding a growing rat population.

Hence, coincidentally, I’m familiar with rat droppings such that, when walking past a grab & go outlet the other day, I mistook a bunch of dropped coffee beans for the produce of a pack of rats and was momentarily horrified until I fairly promptly put two and two together.

Nonetheless, they looked very similar though, even though these beans had been thrown out, I have little doubt that they would taste rather different.

There’s a coffee shop joke in there somewhere but, considering how frequently we all visit such establishments, it’s probably not one that we want to hear. On to the news:

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PUBS & RESTAURANTS:

Takeaway and delivery:

• The BBC reports that the ‘taste for takeaways outlasts Covid lockdowns’. This is a) good news for delivery companies and for restaurateurs that have embraced the medium but b) consumers only really have so much cash.

• Further comment: See premium email.

Getting to the customer:

• Pragma Consulting reports that there are 3.78 billion social media users worldwide. It quotes Cybercrew research as saying there are 48 million active social media users in the UK – some 67% of the population – ‘with the average user spending 110 minutes on social media per day.’

• Further comment: See premium email.

Trading:

• The MCA quotes Lumina Intelligence as saying that over half of the UK adult population had an eating or drinking out occasion as restrictions eased across the UK during July.

• Further comment: See premium email.

• The consumer is borrowing less. The Bank of England reports that, in July, UK consumers paid back around the same amount as they took on in new debt. These were, presumably, different people doing the opposite thing but the implication is that consumers are taking less risk.

• Further comment: See premium email.

• For staycations comment, see holidays below.

Company & other news:

• Per MA, supply chain issues are set to continue as the shortage of delivery drivers and staff rolls on. The ONS reported that 20.4% of accommodation and food service operators have had issues with getting goods or services.

• Meanwhile, Nike is to give staff a week off to support their mental health. It says it ‘can prioritise mental health and still get work done.’ Whether this is an acceptance that the work / life balance may be skewed in the US or a wider move that may put pressure on European companies remains to be seen. The Telegraph quotes the CIPD in the UK as saying ‘this will certainly be welcomed by employees and signals clearly that their employer recognises that their wellbeing is important and is prepared to invest in this.’

• In response to the news that Scottish first minister Nicola Sturgeon was considering the introduction of vaccine passports to pubs & restaurants north of the border, a number of trade bodies have come forward to say that imposing passports could create a divided society.

• The Local Government Association calls for alcohol-related hospital admissions to be considered when granting or renewing operating licenses for pubs, bars, restaurants and clubs. This means it would become a key part of the assessment criteria for granting licenses and allow for action ‘where premises fail to protect the health of their communities’.

• The MCA reports that JW Lees has indicated that there has been a resurgence of walk-ins benefiting the pub industry. The Manchester group reported that 71% of meals served last week were walk-ins.

• The SIBA North East Independent Beer Awards saw Metalhead Brewery win overall Gold with their beer ‘Pretty Vacant’. The other top award for Overall Gold in the Bottle & Can competition went to Swaddle Micro Brewery, winning with their Czech-style Pilsner lager. 

• Urban Pubs & Bars has entered into partnership with Davidson Kempner and Global Mutual to support and accelerate the growth of the company. The company says ‘Nick Pring and Malcolm Heap will continue to lead the business as the new joint venture targets significant expansion across London and nationally.’ UPB currently operates 21 sites across flexible trading formats. Co-founder Malcolm Heap says ‘the biggest challenge won’t be about finding the sites it is more likely to be around building the team to facilitate such rapid growth.’

The US market:

• US restaurants. Customers want more staff & suggest they should be paid more. Research from JLL has found that 52% of customers believe more staff should be put on at peak times and 48% believe that paying higher wages will have a positive impact.

• Further comment: See premium email.

• The National Restaurant Association in the US believes that restaurant sales across the country will total $789 billion this year. Earlier this year, the NRA had been looking for sales to reach $731 billion. This is up 19.7% on 2020 but down 8% or so on 2019 sales.

• In the US, the National Restaurant Association reports that restaurants employment numbers are still 8% below pre-pandemic levels. According to the report, the two biggest challenges to the industry’s recovery are increased customer hesitancy around the delta variant, and the ongoing labour squeeze.

HOTELS & LEISURE TRAVEL NEWS:

Staycations:

• The Guardian comments on staycations saying that there has been a sharp rise in complaints from “impatient” visitors and “Tripadvisor warriors”. Holiday providers say that ‘grumpy customers’ are ‘more demanding and even abusive when they can’t get a table in a restaurant or have unrealistic expectations of service.’

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• Awaze UK, owner of Hoseasons, will add more than 600 new properties to its UK portfolio with the acquisition of Welsh cottage specialist Quality Cottages and sister brand Quality Unearthed.

• Staycation prices. Credit to our Retail Commentator, Mr Bubb, for pointing out the words of Deloitte on the price of staycations. The accountant says ‘the cost of domestic holiday accommodation has surged with the strongest price increases for seaside breaks. It is more expensive to stay for a week in a two-bedroom lodge at Piran Meadows, a caravan park near Newquay, than it is to spend a week at the Savoy, one of London’s most famous luxury hotels.’

• Further comment: See premium email.

Hotels:

• PPHE Hotel Group has reported H1 numbers to 30 June 2021 saying that it saw ‘improving demand during the second quarter’. The company says that it generated total revenue in H1 of £25.8 million (H1 2020: £61.9 million, which included a pre-COVID January and February). It says that in Q2, total revenue was £20.4 million, up 95.8% vs Q2 2020. The EBITDA loss was ‘limited to £14.0 million in H1 through decisive actions to mitigate the impact of the COVID-19 pandemic (H1 2020: loss of £3.3 million, which included a pre-COVID January and February). In Q2, EBITDA was £(3.9) million, up 42.4% vs Q2 2020.

• PPHE says that its ‘financial position is strong, with £237.9 million cash available at 30 June 2021, which consists of consolidated net cash of £177.9 million, and further access to undrawn facilities of £60 million’ and it maintains that it is ‘well positioned for recovery.’ The majority of the group’s units are now open but it says that ‘occupancy in the Group’s key cities is currently dominated by domestic leisure demand as air travel is still subdued’ though ‘positive booking trends continued into July and August in the UK, the Netherlands and Germany, again driven by predominantly domestic leisure activity.’

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• STR reports that the number of hotel openings in Europe ‘is expected to hit an all-time high in 2021, with more than 100,00 new rooms estimated for the year.’ It says that ‘more than 50,000 rooms have opened thus far in 2021, which is already more than all of 2020, and scheduled openings for the remainder of the year are expected to grow the number to more than 100,000 total.’ It says this represents some growth held over from 2020 but says ‘the pace of openings is not expected to slow significantly in 2022, with a further 100,000 openings anticipated. Europe’s previous peak for new openings came in 2019 with 74,852 rooms.’

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• Per HotStats, the US hotel industry saw RevPAR more than $20 higher month on month in July 2021, with occupancy up to 60%. However, total payroll hit $92 per available room in July 2021, only $18 off its July 2019.

General & company news:

• Reuters reports that the EU has begun the process to remove the United States from the 27-country bloc’s ‘safe list’ of countries. This indicates that travel restrictions and quarantines will be applied to US travellers in the near future.

• Ryanair CEO Michael O’Leary told Sky News the UK should scrap its ‘bizarre’ rules governing foreign travel, saying they are holding the country’s economy back. Ryanair revealed 14 new routes from London airports for the looming winter season.

• Jet2 will buy 36 new Airbus A321 neo aircraft, with current list prices valuing the deal at $4.9bn, and also agreeing flexibility to extend the order up to 60 aircraft. The airline said it has negotiated ‘significant discounts’ from the list price.

• Commenting on his company’s aircraft order, Jet2 CEO Philip Meeson comments ‘we are delighted to have placed this order with Airbus and are proud to operate this aircraft which has more seats, provides additional operating benefits through lower fuel consumption and is, in our opinion, the most efficient and environmentally friendly aircraft in its class today – it will ensure our Customers have a wonderfully comfortable and enjoyable experience as they travel with us.’

OTHER LEISURE:

• 888 Holdings has reported H1 numbers to end June saying that it saw ‘record first half revenue and profit, strong strategic progress [and has] increased full year expectations.’ The company says revenue rose 39% to $528m with adjusted EBITDA of $97m (2020: $70m) and adjusted PBT of $75m (2020: $50m). Re current trading, the company says ‘revenues throughout July and August increased by mid-single digit percentage relative to the prior year period, with the slowdown in the rate of growth reflecting the impact of retail and leisure venues reopening across international markets, and the previously disclosed expected impact of regulatory and compliance changes.’

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• ByteDance, owner of TikTok, has acquired virtual reality headset maker Pico, in a move to rival Facebook’s moonshot. Pico had raised some $62 million in venture funding from Chinese firms, including a $37 million Series B in March.

• Zoom reports quarterly revenues of more than $1bn, up 54% yoy. However, the share price fell after the company warned of demand cooling off. It also faces competition from rivals such as Cisco’s Webex and Microsoft Teams. 

FINANCE & MARKETS:

• The latest measure of business confidence reported by Lloyds Bank says that UK business confidence has hit a four-year high as optimism about the post-Covid recovery has buoyed spirits. Lloyds says that companies have nonetheless highlighted concerns about staff shortages.

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• The Telegraph reports that higher inflation will cost the UK treasury (aka) the taxpayer, an extra £12bn this year as a quarter of the country’s national debt pays out interest linked to inflation, specifically, retail prices.

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• The US Conference Board’s Consumer Confidence Index has dropped to 113.8pts in August, a 6mth low. The drop is thought to be due to the spread of the Delta variant in the US. Deaths in the US (which has around six times as many people as the UK) are running at around 10,000 per week compared to around 800 in the UK. The July measure was 125.1pts.

• The FT reports that increased homeworking during the pandemic is responsible for pushing up house prices in areas surrounding most of Britain’s biggest cities more than in the urban centres.

• Sterling weaker at $1.3737 and €1.1640. Oil lower at $72.10. UK 10yr gilt yield up 4bps at 0.62%. World markets lower yesterday but Far East up in Tuesday trade & UK set to open up around 34pts as at 6.45am.

RETAIL WITH NICK BUBB:

Today’s News: The WH Smith pre-close update (for y/e August) flags improving sales trends over the last 8 weeks, with full-year profits to be slightly ahead of management’s cautious expectations. Having said that, the key UK Airport Travel shops saw sales as much as 70% below 2019 levels in July/August, but UK Hospitals were only 15% down and UK Rail was only 41% down, whilst the UK High Street was a mere 16% down and the important North American business was only 7% down. The sting in the tail, however, is that “While there will be a return to good levels of profitability in the year ending August 2022, the trajectory of the recovery in travel remains uncertain. This…means that we currently anticipate the levels of profitability for the year ending August 2022 will be at the lower end of market expectations”.

This Week’s News Flow: The McColl’s EGM to approve the highly dilutive equity placing is being held at 11am this morning and at about 5.30pm this evening the latest FTSE index quarterly review is announced (with Morrisons expected to make it back into the FTSE 100 index, with its current £7bn market cap, at the expense of Just Eat). Tomorrow lunchtime the US jeweller Signet (which owns the UK chains of H Samuel and Ernest Jones) announces its Q2 results.

TRADING STATEMENTS & EVENTS:

Upcoming results are set out below:

• 1 Sept 21 PPHE H1 numbers

• 1 Sept 21 888 Holdings H1 numbers

• 2 Sept 21 Jet2 AGM

• 2 Sept 21 Gym Group H1 numbers

• 7 Sept 21 DP Eurasia H1 numbers

• 9 Sept 21 Gear4Music AGM

• 15 Sept 21 Restaurant Group H1 numbers

• 16 Sept 21 C&C H1 trading update

• 21 Sept 21 Compass Group full year update

• 22 Sept 21 Ten Entertainment H1 numbers

• 23 Sept 21 Playtech H1 numbers

• 25 Sept 21 (est) GfK UK Consumer Confidence numbers

• 30 Sept 21 New River investor day

• 1 Oct 21 JW Wetherspoon

• 5 Oct 21 Gregg’s Q3 update

• 13 Oct 21 Marston’s FY trading update

• 22 Oct 21 Intercontinental Hotels Q3 numbers

• 25 Oct 21 DP Poland H1 numbers

• 26 Oct 21 Campari Q3 numbers

• 23 Nov 21 Compass Group FY numbers

• 24 Nov 21 Britvic FY numbers

• 30 Nov 21 Marston’s FY numbers

• 8 Dec 21 TUI FY numbers

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